Credit card and debit card payment systems have been developed to enable cashless payment for goods and services at the point of purchase by the use of credit card or debit card. The cards are issued to users (card owners) by financial institutions such as banks, Credit Unions or Trusts and they represent identification of a bank account with the issuing financial institution. In order to enable the card owners to use the cards at the point of purchase locations payment systems have been developed that allow transfer of an electronic purchase request transaction to the financial institution for authorization against the user's bank account. Once the balance of the bank account is checked and determined sufficient to cover the requested purchase amount an authorization transaction is sent back to the point of purchase location, which in turn instructs the merchant that the purchase amount is guaranteed and the goods can be released to the card owner.
The biggest challenge facing any card payment system is security of the credit card information. This is especially difficult for credit card based systems where there is no Personal Identification Number (PIN) assigned to the card. In recent years VISA has introduced their own PIN for Visa cards only but that solution is not available on majority of credit cards in circulation. However, those types of solutions cannot solve the major weakness in the existing card payment systems that exclude the card owner from the transaction flow and solely rely on merchant—card issuer interaction to authorize the payment.